How Should the UK Support the Uptake of Domestic Solar PV Storage?

Despite all the benefits energy storage provides to the grid and generators and its integral part in the future of solar PV in the UK, it is not yet a financially viable investment for any distinct part of the value chain.

A varied range of solutions and opportunities designed to encourage the adoption of domestic scale energy storage are being used around the world for the UK government to understand and learn from. Ongoing research hopes to identify additional policy options and suitability in the UK market

Domestic scale PV accounts for 1.5GW of the 2.5GW currently installed in the UK and it is expected to remain the main driver of growth in this sector. Due to the intermittent nature of solar PV, energy storage needs to form part of the predicted potential of 20GW by 2020. Increasing self-consumption reduces the growing burden on the grid, the associated costs of system upgrades and the electricity bills of generators. Storage can assist with balancing demand, reduce the need for peaking plant and importantly it will enable the continued growth of decentralised energy.

Similar grid infrastructure problems exist for global major solar pv market players. In order to address this problem, a range of solutions to encourage the adoption of storage are being introduced in the US, Japan and Europe. As set out below, legislation, targets, investment into innovation and financial incentives such as the feed-in tariff, variable electricity tariffs and capital subsidises are all being introduced and developed within a range of political, economic and social settings.

California

The California Renewable Energy Resources Act requires 33% of its electricity to come from renewable sources by 2020. The proposal, which is currently in the consultation stage, sets a suggested 2020 procurement target of 1.3GW of battery storage for the Californian utilities, 15% of the target is to be achieved from customer storage. Alongside this, the California Solar Incentive (CSI) is scaling back and storage is being subsidised at $1,800/kW through the Self-Generating Incentive Programme (SGIP)

Market rate net metering in California provides solar generators with a credit for export, at the current retail price. Time of use (TOU) meters will be required for recipients of solar incentives when TOU tariffs are available. Storage will allow sales at peak times when retail prices are high and purchases or storage at off peak times.

In a strategic analysis on energy storage by California’s Public Interest Energy Research (PIER) Programme to encourage take up, it was suggested the Independent System Operator could implement imbalance charges for intermittent resources and regulatory bodies could provide greater certainty of investment return by developing a valuation method to help monetise the benefits provided by energy storage. A ruling this month by the Federal Energy Regulation Committee requires installed storage reporting and accounting for greater monitoring and to inform policy decisions.

Germany

The leaders in solar pv per capita, Germany, has a goal of producing 35% of electricity from renewable sources by 2020 and 100% by 2050. Whilst its successful generous FiT’s have slowly been cut and will unlikely continue past 2018, storage remains an integral part of policy revision in this area where they have launched a subsidy for purchases of solar pv battery systems paying €660/kW ($863). Initial reports suggest the subsidy has complexity issues and slow take up at present. Loans have also been made available by the government owned bank KfW. Prior to introducing this subsidy and until a review of Germanys energy policy, solar generators were paid a bonus per kWh for greater than 30% self consumption.

Japan

While many European countries have been cutting back on solar incentives, Japan introduced one of the highest FiT’s levels in July 2012 in order to encourage more widespread take up. This has lead to Japan becoming one of the fastest growing markets in solar pv. Following the Fukishima disaster, Japan has set a 20% target by 2020 for renewable generation. Driven by power outages and to secure its leadership position in battery manufacturing, Japan has introduced a 3 year subsidy program that covers 1/3 of the total cost of residential energy storage systems.

Earlier this year a joint venture, One Energy Corporation launched an energy service for households combining storage battery rental plans and a smart house application.

The UK

In the UK, focus has been on innovation and pilot projects. The Low Carbon Network Fund (LCNF) is a £500m fund for distribution network operators to support projects that are trying out new technology, operating and commercial arrangements. One of the LCNF projects led by Western Power Distribution, SoLa Bristol is combining a Real-Time Pricing tariff with integrated network control and domestic solar energy storage. At a recent seminar WPD suggested such variable tariffs are being considered but could take 3-5 years before they would be in place.

Developing a sustainable solar storage policy is a complicated task and time is of the essence. Ensuring investors are adequately rewarded for the associated benefits as well as giving consideration to targets, energy prices, security for investment and support to the industry are all important when developing a suitable policy.

Whilst having regard to the barriers and opportunities that are characteristic to different energy markets and political structures, lessons can be learnt from the current proposed solutions and can assist in us in the UK with developing our own policies.